Mortgage services.

Mortgage application activity declined again last week as refi demand continues pulling back after the surge in mid September. According to MBA’s Weekly Applications Survey for the week ending October 3, total volume fell 4.7% on a seasonally adjusted basis and 5% unadjusted. The Refinance Index decreased 8% from the previous week but remains 18% higher than the same week one year ago. Refinancing activity pulled back broadly across conventional and VA segments after climbing to multi-year highs in September. This is a logical move considering rates were at long-term lows in mid-September and then rose sharply to the present range on September 17/18.  “With mortgage rates on fixed-rate loans little changed last week, refinance application activity generally declined, with the exception of a modest increase for FHA refinance applications,” said Mike Fratantoni, MBA’s SVP and Chief Economist. “Refinance volume remains somewhat elevated relative to levels of a month ago. Purchase activity declined by about 1 percent for the week but continues to show moderate growth on an annual basis, and stronger growth for FHA loans, favored by first-time homebuyers.” Purchase applications slipped 1% on both a seasonally adjusted and unadjusted basis but were still 14% stronger than a year ago. The refinance share of mortgage activity decreased to 53.3% of total applications. The adjustable-rate mortgage (ARM) share increased to 9.5%. The FHA share rose to 18.5%, while the VA share edged up to 16.3%.

The National Association of Realtors’ Pending Home Sales Index (PHSI)—which tracks contract signings on existing homes—ticked higher in August, but remains locked in the same flat, depressed range that has defined the past two years. Pending home sales rose 4.0% in August, lifting the index to its highest level since March, and 3.8% above the same month last year. That all sounds pretty good, but the chart tells a more sobering story. The overall trend hasn’t changed: contract activity continues to bounce around within a narrow band, showing only modest sensitivity to month-to-month rate shifts (which could also simply be coincidental). Regional Breakdown (Month-Over-Month) Northeast: −1.1% Midwest: +8.7% South: +3.1% West: +5.0% Regional YoY Change Northeast: +2.6% Midwest: +6.7% South: +4.2% West: +0.2% Three of the four regions posted solid monthly gains, led by the Midwest and West. On a yearly basis, all four regions were slightly positive, with the Midwest again the strongest performer.

Both the FHFA and the S&P CoreLogic Case-Shiller indices published updated home-price data this week. The message hasn’t changed: prices are still higher than a year ago, but the pace of growth continues to slow. Case-Shiller is now at its weakest year-over-year level in more than 2 years, while FHFA remains stuck near the lowest growth since 2012. The eternal caveat with home price data is that the "lowest in x years" classification doesn't mean home prices are falling if the percent change is still positive--something that's still easily the case in annual terms.  Another way to visualize this is with the simple price indices themselves (NOT the percent change). Note: the following chart's y axis is normalized such that 100 = 100 for both indices (which simply makes it easier to see correlation). The takeaway from this second chart is quite different. Prices remain near all-time highs and have only ebbed slightly in recent months. None of the moderation in prices over the past few years even belongs in the same conversation as the massive correction seen during the great financial crisis. FHFA House Price Index (seasonally adjusted, MoM) July: −0.2%; June was unrevised at −0.2% YoY: +2.8% from July 2024 to July 2025 All nine census divisions remained positive YoY, with gains ranging from +0.6% in the Mountain division to +6.5% in the Middle Atlantic. Case-Shiller National Index (unadjusted)